Conversations with Tyler - David Cutler and Ed Glaeser on the Health and Wealth of Cities

Episode Date: September 8, 2021

With remote work becoming more common and cities competing for businesses it's become easier than ever before for educated Americans to relocate, leaving cities more vulnerable than they've ever been. In their new book, Survival of the City: Living and Thriving in an Age of Isolation, economists David Cutler and Ed Glaeser examine the factors that will allow some cities to succeed despite these challenges, while others fail.  They joined Tyler for a special joint episode to discuss why healthcare outcomes are so correlated with education, whether the health value of Google is positive or negative, why hospital price transparency is so difficult to achieve, how insurance coding systems reimburse sickness over health improvement, why the U.S. quit smoking before Europe, the best place in America to get sick, the risks that come from over-treatment, the possible upsides of more businesses moving out of cities, whether productivity gains from remote work will remain high, why the older parts of cities always seem to be more beautiful, whether urban schools will ever improve, why we shouldn't view Rio de Janeiro's favelas as a failure, how 19th century fights to deal with contagious diseases became a turning point for governance, Miami's prospects as the next tech hub, what David and Ed disagree on, and more. Read a full transcript enhanced with helpful links, or watch the full video. Recorded August 31st, 2021 Other ways to connect Follow us on Twitter and Instagram Follow Tyler on Twitter  Follow David on Twitter Email us: [e-mail] Subscribe at our newsletter page to have the latest Conversations with Tyler news sent straight to your inbox.  Thumbnail photo credit: Briana Moore

Conversations with Tyler is produced by the Mercatus Center at George Mason University, bridging the gap between academic ideas and real-world problems. Learn more at Mercadis.org. And for more conversations, including videos, transcripts, and upcoming dates, visit Conversationswithtyler.com. Hello, everyone, and welcome back to Conversations with Tyler. Today I am here with two Harvard economists who have a new book out, co-authored, and the two economists are David Cutler and Ed Glazer.

The new book is called Survival of the City, Living and Thriving in an Age of Isolation. So it's about urbanism, it's about the pandemic, it's about health care economics, and much more. First, I will be starting with David Cutler, who is Professor of Economics at Harvard. David is well known as simply being one of the very best healthcare economists ever. David, welcome.

Well, thank you very much for having me. It's a pleasure to be able to see and speak with you. Here are all the questions I want to ask you about your work. To start, why does education predict health above and beyond its ability to predict health behaviors and to predict income? One of the most important things that we've observed about the world is that people are better educated, are in better health. And that's true virtually systematically, and it's increasingly so over time, that is,

the gap between people with a college degree and people without a college degree is growing over time, even as other gaps, for example, between whites and blacks are shrinking over time. So there are a few different things that are going on at the sort of instrumental level in the sense of what that affects health is happening. Health behaviors are a part of it, things like smoking and obesity. So are things like environmental exposure? So exposure to pollution is lower for higher SES people, both by where they live in the country and even within a city by where they live. Stress levels seem to generally be lower for higher CS people relative to lower SCS people and chronic stress has a variety of adverse health impacts. Access to medical care

is better for people in higher socioeconomic groups relative to lower socioeconomic groups. So all of those contribute. If you step back even before those, I think as a setting where society has really made it much easier for high-income, high-S-ES people to be able to engage in the types of things and buy the types of things that are associated with improved health. So the nature of life, the nature of where people live, the nature of education, the nature of everything is such that it's easier for higher-income people, higher-S-people, to do well. And that, as I say, unfortunately, increasingly so. Education seems to matter a lot. And it's also puzzling to me, in your own work, it matters more at younger ages.

So you would think the returns are cumulative. It would really pay off when you're 67 because you've invested in a stock portfolio for decades, but it matters most when you're young. What's your best micro account of that? One of the things that's super interesting is that, for example, people who live in cities where they're more better educated people smoke less, even conditional on your own education. And the same thing is true about weight and so on. I think it's partly that cities and areas are sort of run by,

kind of upper middle class folks often. And so, for example, the environment is set up in a way that's more conducive to health when you have more upper middle income people. It's much more difficult to smoke. There's healthier behaviors in general. There are parks and things like that. So I think part of it is just that society is shaped by higher income, higher SES people, and that can be good for everyone who lives around those areas. To the extent education makes you healthier by lowering your stress and raising your relative status, which is a possible hypothesis, right? What are the policy implications of that? What should we do? I think part of what we're learning over time is that social insurance programs are actually having

a bigger and more sustained effect on health than we had thought they did. So for example, we've always thought of, you know, Medicare and Medicaid as being the primary social insurance programs that affect health. Then there's research that the WIC program, women, infants, and children affects health, that food stamp programs affect health, that TANF benefits. it's affect health, that housing policies can affect health. And you think that's through lowering stress as one mechanism? As one mechanism, I think it's through lowering stress. I think there are many other mechanisms as well.

But what we've seen when we've looked more carefully at long run data is that many programs really seem like they have a big impact over the course of the life cycle on people's health. So I'm a big believer that one way to improve health is to help make sure that social insurance programs are reaching everyone they ought to and are doing it in the best way. What do you think is the health value of Google, either positive or negative? It's the busiest doctor in our country, right? How do we assess that? Oh, absolutely. So information technology is dramatically changing how people interact with the medical care system. I haven't seen a formal

study on this, but my sense is that Dr. Google has actually been pretty good for health, because now you can find out things about, you know, where can I go to get a COVID test or what about flu shots and so on. So I think for many people who have difficulty finding a doctor and interacting with the medical system, that is very helpful. I will say, though, that for example, if you look at, let's just take the anti-vax community, you say, well, you know, maybe if the anti-vax community spent more time Googling the CDC website, they would not be anti-vaxxers, that actually turns out to be incorrect, that the vast bulk of people who are prolific in the anti-vax community know exactly what the CDC says. They just don't believe it. So it's not that Dr. Google will solve all the

problems, but I think for some people, it can be quite helpful. Does that positive side show up in the numbers anywhere? I haven't seen a really good study that's looked at, you know, access to the internet and health. But one particularly good thing that's come out of the COVID pandemic is that now telemedicine seems firmly implanted. And that's really a result of improvements in IT and stuff. So your ability to see your doctor online has really been a blessing to a lot of people. So it's not exactly Google, but it's of the same spirit. If you could have new data to study one question in health care that so far has been hard to study, what would that be? Well, I think you hit on the big issue at the start, which is how do you take people who have

difficulty interacting with the medical system and for whom society has been somewhat unfair and at least try and improve some aspects, their health, their economic circumstances, but we'll stick here with the health component. How do you reach people for whom society's opportunities have not extended as much and do what you can to make their health be better? What do you make of the Latino life expectancy paradox? So Latino immigrants come to the U.S., often not speaking English, not well-connected at all. They often outlive people who are born here, but their descendants do less well.

You're sort of presupposing that it's about the people not being well equipped to handle ordinary America, but Latinos seem to show the opposite trend. Latino immigrants, so first off, there's a little bit of selection in terms of Latino immigrants, but in part also they bring behaviors that are typically from the countries where they are, and then second generation will be more like Americans and so on in terms of smoking and obesity and a variety of adverse behaviors like that. So I think that the closer you get to Native Americans, the more you look like Native American health issues. And then there's a mix depending on the health behaviors that one brings from the country where you are from, some of which are favorable, some of which are less favorable. Now, you've written some of the best known papers on obesity and put forward the hypothesis that rising obesity is due in part to food preparation being quicker and easier. If that's true, why don't diet's work better? Because food preparation lowers the relative

price of eating. But if you just target the quantity directly by dieting, it seems that most people don't lose weight by dieting. It'd be odd for the price to matter, but the quantity not to matter. I have puzzled over this a lot. So what I think is happening is that it plays into our inability to delay gratification for periods of time. So what people say, including myself very frequently, is I'm going to start dieting and exercising tomorrow or next week. And if I really am going to start dieting and exercising next week, then it really doesn't matter what I eat this week because everything will be fine. The difficulty is that next week I'll say the same thing about the following week. So people have a very short-term horizon where they have difficulty understanding that

if I don't do it this week, I'm not going to do it next week, and then I'm not going to do it the following week. So we could take all the time we've saved on food preparation and cleaning. We could devote some of that time to exercising. We could work off the additional and still have time left over. So as a society, we could do that. But we don't do that, I think in part, because every week we say, yes, I'm going to start that next week.

Why is obesity such a big problem in rural Mexico, say Chiapis? I mean, we know why, like they drink too much Coca-Cola, but structurally, why is that the case in terms of relative prices? What's happened in a lot of countries is as they get richer, they adopt more of a Western diet, particularly a U.S. diet. So you adopt a diet that's high in corn syrup, and fast food and salty foods and things like that. You observe this in parts of rural Mexico when there's some income.

You observe that a lot in islands in the Pacific that all of a sudden had mineral wealth. So people are sort of endowed with a lot of money. And then one of the things that they do is their diet changes to a Western diet. And so you have in some of these islands, you have, you know, 70 or 80 percent obesity rates and all the diabetes that comes along with that. Same thing in parts of Mexico where, again, the diet has changed very rapidly to a U.S. diet, and with it comes U.S. type health problems. What do you make of the data that suggest both pets and even lab animals are growing fatter?

Food is much cheaper, right? So we can afford much more of it. But lab animals we control what they eat, right? There's some kind of regimen. Obesity seems to be rising in cases where relive prices facing humans are not obviously the culprit. Is it that people are buying more cat food and labs are spending more for their rats? It seems odd. Yeah, I don't know quite about the labs. presume that they're feeding them more, since my guess is the exercise is controlled, and there wouldn't have been genetic change that rapidly. It could be the components of the

food are different as well. That is, you know, to a first approximation, what matters is total calories in, but there are probably types of calories and in combinations of calories that lead to more or less weight gain. It also depends on what time of day one eats and a variety of other things like that, too. What do you think of the, well, I call them the residual theories, that there's something unknown in the environment. It could be a chemical, something in the way we live, causing obesity levels to increase, and we just haven't identified it yet. Do you take this seriously, or are they just made up stuff? So I do take it seriously as a theory, absolutely. And one of the things that I think the literature has not been as good at as it could be is the impact of the

environment, not just the environment in terms of green space and, you know, ability to walk on streets, but the impact of the environment in terms of pollution and exposure to various substances and what that may then do to health. Things like, you know, go back always, it took a long, long time to figure out what it was in tobacco that led to cancer and heart disease and so on. There are just so many things out there and you don't really know out in all the combinations and what's being burnt and so on. So as theories, I absolutely think they're important. You know, at the moment I don't know of enough evidence to say, you know, for certain these are some of the things that we need to worry about. There's been much more on the sort of pollution end

with respiratory disease where there's obviously a very good link, but also things, there have been recent hints about dementia and Alzheimer's disease in the elderly. So I wouldn't be surprised if some of these environmental factors turn out to be bigger than we had thought, but I don't have anything yet that I look at and say, okay, this is obviously definitive on this point. Why is hospital price transparency so hard to achieve? So we've passed laws, good laws in my opinion, The Trump people were for them and doubled down on the issue. When hospitals don't do it, they get a slap on the wrist. Maybe they're sent a letter in the mail.

Voters seem to like the idea. Why has that been such a tough slog? Yeah, it was one of the very few things that the Trump administration did that I really enjoyed and that I give them credit for was their attempt to push this. Everything that we know in health care is that people have difficulty choosing on the basis of price and quality. And it goes back a little bit to some of the behavioral issues that we were talking about. but I think it's slightly different. If you go to the doctor and the doctor says you should take medication X and you go to the pharmacy and the pharmacy says that'll be $30, a fair number of people

will walk away and say, I don't have $30. What we would hope they would do is go to their doctor and say, Doctor, is there any way that there could be a cheaper medicine that might work because $30 is kind of hard for me this month? In practice, people are extremely uncomfortable doing that. They really don't like to go to their doctor and say, doctor, you know, how do I trade off the money here versus the medicine? And so as a result, they wind up not taking the medicine. And then they avoid the doctor because they're ashamed to admit to the doctor. So people really don't like the money being involved in the medical care part. And they're also very afraid of the quality part, of having that quality discussion. So for example, before you'd buy a TV, you'd look up and see, you know, what are the

different characteristics and so on. But yet before you do certain. People rarely look up, you know, how good is that surgeon and what's that surgeon's record and what question should I ask of that surgeon? They'll ask it of the TV. They'll ask it of the refrigerator, but they will not ask it of the surgeon. Nor will they ask it of the referring doctor. They won't say, doctor, are you sure this is the right person and so on? It's almost like they don't want to put that doubt. They don't want to say, look, I'm not sure you're the right person or this is the right thing for me. So the net effect is that when these data are out there, they just don't get widely used. Hospitals don't want to put it out there because they don't want to be compared. And if the patients are not going to complain that much, they say, fine, I'll just do the minimum possible.

Sometimes I won't even comply. And there's no burning need for me to put that information out there. How do we explain the cross-sectional variation there? Because I agree with what you said. But if I look, say, today at the vaccines, there are really quite a few Americans who obsess over Vardana versus Pfizer or this versus that. Maybe some of what they think is wrong, but they spend enormous amounts of time on social media, consuming information about vaccines.

They don't seem to be put off by nervousness. Yet when it comes to the brain surgeon, there's nothing, right? Very hard to find out anything, and that's endogenous because in part the demand isn't there. What accounts for that difference? You can sometimes get people to do shopping. So where people have time and settings, and it's a very clear choice, you can get them to do some shopping. Particularly if also they're not people involved. It helps if it's a pill and not a person

who you're deciding, you know, between yes or no and where you don't feel like your doctor has a stake in it, you know, where something like that. You know, ironically on the vaccines, people mostly decided on their own without a doctor's recommendation as to which one they wanted. So therefore they would go online and decide, you know, which of the different vaccines do they want. So sometimes you can do that. The other famous example of where you can do that is, for example, in vitro fertilization, where the records of the different centers do seem to matter. That is, people will go more to the centers that have a good record because, you know, families are thinking about which centers should I go to and stuff like that. For other things, particularly when, you know, it's a surgeon who

you feel like you might be offending or it's a conversation with your doctor that you don't feel comfortable with, then people are extremely loath to do that. So I would say that in some settings, you can make it happen, but oftentimes you can't. Why don't we have more paying for health care outcomes. I give my doctor a bonus if I stay healthy, for instance. More complex ways of doing it using intermediaries, collective contracts, but there's very little. Why? As you know, I wrote, one of the books that I wrote really has a lot about pay for performance. And first off, we've had the past decade, particularly the past five years or so, there's been enormous experimentation with it. So there's been quite a lot of paying for outcomes, not in

massive ways, but in reasonable ways. So, for example, the accountable care organization movement that the federal government does for Medicare and that most private insurers do some of and that many state Medicaid policies do, that is very much involved in paying for performance. And when people do bundled care arrangements, like I'll pay you a fixed amount for a knee replacement, they'll always have quality indicators in there. And for primary care doctors, contracts that are sort of fixed contracts, like we'll give you a certain amount per patient per month, those often have quality indicators in there. So they're in there, but they're not used as extent. They haven't dominated as extensively as people would like. The evidence on them is that they are effective in that when you put them in,

quality improves, costs stay the same or decline. So as best we can tell, they're very effective. they have not turned out to be absolute total game changers. We haven't yet found the thing in healthcare where we say, if you do this, you will save 15% on dollars and quality will go through the roof. And if you were to express that in terms of the model, like what's the limitation in economic terms? Something we can't measure,

something that's not contractable, or what? I think there are a couple of parts. So one part is that every individual insurer has their own system. and so the doctor finds it very difficult to customize what they're doing to every single insurer. So they get one set of incentives from Medicare and another set of incentives from their Blue Cross policy and another one from the United Policy. And even within Blue Cross, it varies depending on which plan you're in. So that's one is that it's very difficult when it is so diffuse.

And I think the second one is that many of these are also coupled with systems where you can make more by making sure your patient appears to be sick, and therefore when they turn out okay, you get a lot of money. And so a lot more effort nowadays is put into making sure you're coding appropriately so that you get all the reimbursement for the sickness of the patient, as opposed to saying, okay, the patient is what the patient is and the way I make money is by making sure they're healthier. In principle, you could have doctors do both of those, both worry about the coding and about the patient health. In practice, there's much more effort put into the coding part, which has kind of got a real easy return to it than there is put into the health improvement part. If we think about

very wealthy individuals who could afford, you know, any scheme and really care about being healthy, and they have some form of concierge medicine and possibly even a buyer agent working for them, what do those incentives look like? Or what should they look like? I think for everyone, there should be a fair component of performance-based payment. I think it would be better if we made it easier to judge them. So, for example, we use things from electronic medical records rather than doctors have to write everything down on pencil and paper and so on. I think it would be better if there were more coordination amongst them so that everyone is in essence rowing the same way or that everyone in the orchestra is playing the same music as opposed to people playing different

pieces of music and expecting to hear it go well. But then what people want from the medical system is to be healthy. And anytime you're not paying for what people really want, somehow you're going to run into trouble. But let's say you, David Cutler, you have $100 billion, right? And you've hired a team of doctors to look after you. What kind of contract do you write with them? You've thought about this more and better than anyone. What would you do? So the kinds of contracts that based on the literature, I think, are best, are you get paid a fixed amount for caring for the person. So a per member, month fee for caring for the person. If you have an episode of care, there's a fixed payment for the episode, so that encourages coordination across the episode. And there's a lot of outcome measurement

so that you can say, if you really do a good job caring for the patients or the patient, then you're going to earn a lot extra. And you would hire a third party to assess how well your doctor had done? Because the literature is not mainly based on people with $100 billion, right? So you're designing something from scratch with extra resources. Yeah, although there are metrics out there that you can certainly use. You know, most conditions, there are reasonable metrics that if you put them together, the docs are generally happy with. They're not perfect.

So I think one could do pretty well by that. And if you captured a lot of the docs' attention, like, for example, the way that you do better, you know, if you look at organizations that do really well, the way the organization does it is they go to the doctor and they say, this is how we're going to practice here. we're going to do images in this circumstance. We're not going to do them in this. We're going to do this in this circumstance. We're not going to do it here.

And then if the doctors say, but that's not the way I've been practicing, you go to them and you say, look, here's the literature. Here's the stack of articles that shows that this way is best. Go ahead, read through them. And if you want to talk about them

and you don't believe they're right, let's absolutely have that conversation. But until we agree that there's something better, this is how we're going to practice. So it's sort of like the whole organization is invested in doing the right thing. And then it sets up its systems and processes so that it's all geared towards

the right thing. Now, as you probably know, from 1950 to 1990, American youth suicide rates tripled. Why did that happen? And they've gone up since then at various times. Suicide rates are an unfortunate, extremely unfortunate, poor outcome. And they've also been going up recently, particularly more among middle-aged folks, but also among younger folks as well. I've done, as you're alluding to, I've done some work on suicide. There are, I think, a confluence of different factors. I think, if you will, On the demand side, there is pain of various forms and there's demand for pain relief. So pain can be physical pain. It can be mental health impairment.

It can be despair. I'm putting those all together as being pain. And then there's on the supply side the ability to carry it out. In the case of suicides, it's access to guns. Guns are typically for men, how men go about killing themselves, ready access to methods of acting on pain very rapidly. In other cases, people will take opioids or they will overdose on other drugs. Again, the more handy they are, the more of that that occurs. Not all of those are rational decisions.

Sometimes it's just an intense response to pain and the need to self-medicate the pain that sometimes goes awry or sometimes it's just, I can't handle it and death looks good now. So I think it's both on the demand side and the supply side. And it varies for different types of things. My sense is what's true about kids is not necessarily true about people who are dying of opioid addiction, where I put a lot of weight on the supply side and less on the demand side there. How strong do you think is the evidence for the Twenge hypothesis that right now iPhone addictions are causing isolation, anxiety, mental illness in young people?

Is that just two time trends in tandem, or is there actual evidence that's true? So it's obviously time trends. The question is the evidence, and I haven't been through the evidence thoroughly enough to have a firm view. I know there are people who believe that it's causal, but I myself don't have a strong view as to what extent it's causal versus correlational. Now, in 2006, you wrote a famous paper, why Americans smoke less, right? And you argue it's because they better understand the health effects of smoking. Now, since 2006, anecdotally, I observe Western Europeans smoke much less than they, used to. Is that because they've acquired a similar understanding or for other reasons?

You started this off in one of the most amazing places, which is that, you know, 40 years after the U.S. Surgeon General conclusively demonstrated that smoking was bad for you, 50 years after it really was known that smoking was bad for you. Americans had cut smoking in half and people in Western European countries had not. How can that persist? And it's not that, you know, in Germany, they had no idea that smoking was bad for you and so on, or in France or anything. But in part, it's the sort of social norms and the peer type influences. And that shows up through public policy as well. So in the U.S., we have periodically raised taxes on cigarettes. We have put in restrictions where you cannot smoke inside buildings. You can't smoke in public places. And all of that

discourages smoking a lot. You know, smoking is also social activity. So if your friends are smoking and you don't have restrictions on where you can smoke, then people are more likely to start smoking and continue smoking. So smoking, I think, displays, even though it's a sort of individual act, it displays a lot of these external consequences, these external effects. And they hit very much sooner in the U.S. than in other countries. That is, people in the U.S. really responded quite rapidly. And it took people in other countries a longer period of time. For that matter, it also took, for example, youth, in the U.S. a longer period of time. So if you look, youth smoking, it was rising through the 1990s until the late 1990s with the master settlement agreement between the tobacco companies and the states.

And all of a sudden, all this information came out about how the tobacco companies were lying to people and they were pretending that they didn't know smoking was bad, even though they knew smoking was bad. And that just turned off so many people, particularly younger people, that youth smoking has begun a two to three decade decline since then. The peer effects, if you will, writ large of information can be ongoing, have huge impacts. And I think that's what we're picking up between the U.S. and other countries. Now, turning to your book with Ed, which again is survival of the city, just coming out, putting aside anti-COVID measures, which we're all familiar with, but how can cities be made less contagious for disease in America?

So we learn a couple of things about cities and contagiousness of disease. One is that poor health anywhere is poor health everywhere. So I may be totally selfish. You know, I go back to when you endowed me with a lot of income, I may care only about myself. And until a couple of years ago, that meant I didn't have to care about the health of people in poorer parts of Boston. And now, of course, I do care about them, but continuing the analogy, and now I really

have to care about them. So I have to worry a lot. Are people obese? because obesity is associated with the spread of COVID-19. Are people smoking because smoking will predispose to other types of illnesses? Are people IV drug users because that's going to spread HIV and that's going to mean that heroin is all over and so my kids are going to be exposed to it in school and so on? Are people using electronic cigarettes? So all of a sudden, I have to worry about all of that. And I think that that has enormous implications for public policy in terms of

what public policy needs to think about. I also think that it changes the conversation from being, when we think of medical care as being, what's my policy towards doctors and what's my policy towards hospitals and so on, we need to reinvigorate more of the public health infrastructure. What's happened over time is that, you know, as infectious disease has declined, we've spent less and less money and less attention on the public health system until basically parts of it collapsed in COVID, and we realized, oh, my God, it's a bad idea to have a non-functioning public health system. So we're going to have to rebuild that, and that's going to mean a lot more money, but that's going to be essential in reducing the spread of infectious diseases.

What's wrong with, say, the CDC? So their budget in real terms has gone up quite a bit. This morning that the day we're recording, they issued a warning to Americans not to travel to Canada, right, which is literally insane. It's the Biden administration now for some time. I'm broadly libertarian, skeptical about government. Even I was shocked when that happened. What's the model that explains how something like that can come about? There are two different types of things. Sometimes there's just bad luck.

So, for example, the CDC's first test for COVID got contaminated. And it took them a while to figure out, you know, what was the contamination and stuff like that. So there's just bad luck. And then sometimes it's sort of systemic in that an agency has kind of fallen apart or it's not sure about its mission or anything else. And then it's a sort of structural problem. One of the things, and I'm sure the libertarian in you wants to go there as well, is I think in general it's a bad idea where all of the public health of the country hangs on one agency. If that agency has bad luck or bad leadership or just, you know, whatever happens, you know, the power goes out, then nothing can happen. You know,

it would be as if there were one hospital in Boston that could do cardiac surgery. And if the doctor was sick that day. I'm sorry, we just can't do cardiac surgery in emergencies that day. So I think in general, it's just a bad idea when everything is stretched so thin that it's hanging from a thread. I also think that, you know, I don't know about how it's functioning now. I haven't done any looking or reading, but the agencies, all of the agencies of the public health system were so beaten down by the Trump administration that good people had left. It was difficult to do anything. They were just getting, you know, stigmatized and they sort of crawled into bunkers and so on. And it takes an enormous amount of time to recover from that sort of thing.

There can be enormous lasting harm from even a few years or a few months of just completely awful policy. Now, take a given family. They're thinking about the health trade-off of moving to the suburbs. What would you advise them? What's the main cost? What's the main benefit? So moving out of a city and into a suburbs. out of a city, not Manhattan, as opposed to moving from a rural area. Right, moving from one of the top

10 cities to an upper middle class suburb. What's the health tradeoff? Probably not much in the sense that most of their behaviors would be the same. The exposure to infectious disease in general is higher within cities. So if you look, this was not true early on in COVID-19, but it's become more so, which is that increasingly, you know, it's sort of urban areas are easier to spread infectious disease because there's more close contact, you're taking subways, things like that. I would say probably on that count there would be a little bit less exposure. On the other hand, one of the things I've always found interesting is that people say they'll be happier when they move to more space, but when you actually ask them before and after,

they're not much happier. And the reason for that, at least in part, is that people get very stressed out by commutes. And they don't realize how much they're going to be stressed out by that. So they think about, you know, I'll have a nice lawn in the backyard and so on. don't realize that five days a week, they'll be spending a lot of time in a car commuting. So I would think that that would be an issue for moving out to the suburbs, which is, is there going to be a lot of frustration involved and stress involved in some aspects of it that one hasn't thought about?

Within cities, are there high returns or low returns to making travel through the city easier? So basically, you would get people to the emergency ward faster. If they had a gunshot wound or a heart attack, does that matter much? Sure, that's seventh order. No, that matters quite a lot. Having a well-functioning emergency system is extremely important. Just take one example. When the marathon bombings occurred in Boston a few years ago, the number of deaths was very small. I think it was two or three deaths. No one who made it to a hospital alive died. And that was because the emergency system had practiced intensely. How do you handle a mass casualty situation? Where do you get people to? What do you do once they're

there, there should have been way more deaths than there were. But it was because of the ability of the system to be able to handle it that we wound up doing better. And so I think for any city figuring out how to get emergencies treated right away and to the right places and then having those places do the right thing is really important. If we put aside the fact that you likely have personal connections where you live right now, right, as many of us do, but just in the abstract, as you grow older, where in this country would you most want to get sick? Say, I have to move from Boston, so I don't really know very much. The sort of upper Midwest has very good health care, you know, if you sort of think about

Minnesota, Wisconsin type area, extremely good health care, pretty much across the board. The gradients there are not as big as you'll see in other areas in terms of the care received. They don't go wild on doing stuff. Life expectancy is high, not all because of the medical care system, but likely a little bit of it is because of the medical care system. There's more of a sort of social ethic to the system in terms of we care about people and people as a whole and stuff like that. So I would say that's probably where I would go if you forced me to move. What's the risk that VIPs get worse care

because they're overtreated? For some things reasonably high. What would those things be? Excessive testing is a big one. So for example, excessive PSA testing for men, potential with prostate cancer. It's not even recommended that you get tested anymore. It's just recommended that you talk to your doctor about testing. Or excessive biopsies in people who, let's say women who have breast cancer, where you might suspect breast cancer, what do you do after that, after biopsy? So it's the sort of cascade, people talk about in terms of a cascade. The first thing is never that bad, but then it leads to the next thing and the next thing and so on. If you look at, you know, people who go into a hospital in, we're talking about, you know,

Minnesota or Wisconsin or so on versus in higher spending areas. In the higher spending areas, well, gee, we noticed this slight little thing on your CT scan that's not related to why you're in here, but maybe we ought to bring in the specialist to look at it. Well, maybe we ought to take that out a little bit. Well, maybe we ought to do this. And so you wind up with this whole cascade of things that are completely unrelated to what was going on or only tangentially related that cost a lot, but bring anguish and sometimes

worse health outcomes as a result. Now, as you know, early in the 20th century, recent immigrant arrivals to the United States clustered together fairly tightly in terms of living in the same areas, often within cities. That trend then weakens throughout much of the 20th century, and in the last few decades, it's been re-emerging. Why is it coming back? There's a line of work that on the health end comes from Anne Case and Angus Deaton and then a colleague Arthur Stone wrote a PNAS paper, Proceedings of National Academy,

of Sciences paper last year, where they argued basically that my shorthand is that education is the new race, that we're learning to how to dismantle some of the barriers that have existed by race, certainly not all of them, but some of them. And that what's coming up is that education is increasingly associated with where you live, what resources you have access to, and so on. And I think that maybe some of what's going on, which is that society is bifurcating along the haves and the have-nots based on socioeconomic status as a problem. opposed to race and that the have-nots are really a large share of that population. And, you know, the have-nots can't afford to live in Silicon Valley.

And they can't afford to live in the Boston metro area. And they can't afford to live in New York. And so, like, if you look, mobility used to be everyone moved to the high-wage areas, but now the high-wage areas have such high house prices that nobody can afford to live there, except if you're extremely wealthy. So it's sort of people are getting compressed into areas. if you want to move, you're getting compressed into areas where they're more lower income people as opposed to more high-wage stuff. And I'm really quite worried that society

is becoming a kind of insiders game as opposed to a situation where outsiders get to play as well. Well, you last have time for only two more questions. Your book with Ed, survival of the city, if you had to pick an area, it doesn't have to be disagreement, though it could be, but simply something you and he see differently. What would that be of the topics in the book? And where does that difference come from? We had incredibly interesting discussions about if businesses left cities because workers decided to move to the suburbs, what would that mean for cities? And would that be like mass terrible?

Would that be not so bad? And I had originally thought, oh, my gosh, that would be terrible for cities if all the jobs moved out. And Ed convinced me that my views were certainly way overstated. Maybe there was nothing to them, but certainly they were way overstated. that, you know, just to give one example, if you move 10% of businesses out of cities, a couple of things could happen. One is that's roughly two or three years of growth, typical growth by business. So within two or three years, you're back to where you were.

Or another thing that can happen is you can turn commercial real estate into residential real estate. And that'll make cities be cheaper for people who really want to live in cities, younger people, people who don't need a lot of space, who don't care about a lawn and so on. And, you know, but people who really want to live close by other people. So that's one situation where my view changed because of conversations that the two of us had just fantastically interesting conversations. Last question. To improve the U.S. healthcare system, if you could offer one non-obvious recommendation, not so much on political agendas right now, but something we could do that would just flat out be better, what would that be? There's so many things that one thinks about. I would say the be-all and end-all of health care, is the money that's spent. When you spend so much money, you can't direct the system well. You can't insure people. You can't invest in the kinds of things you want. After COVID, I would focus first order

on reducing spending. And there are two areas that I would address uppermost in my mind. The first one is certain pharmaceuticals that are way overpriced relative to what they deliver because of whatever gaming and so on. And the second one is the administrative. cost of health care that are absolutely absurd, that drive up prices so people can't afford it, that frustrate people and doctors, that make it extremely difficult for people to get the care they need, and don't do anything valuable. So those are the two areas, and I would show that once I could save there, I could make the medical system be better and cheaper, and then that would start the ball rolling on everything else. A real pleasure, David Cutler. Thank you very much.

And again, David's new book with Ed Glazer is Survival of the City, living and thriving in an age of isolation. It's been a pleasure to be with you. Thank you so much. Now we have Ed Glazer. Ed is Professor of Economics at Harvard University. And most importantly, he is arguably the greatest urban economist ever to have lived. Ed, welcome.

Thank you very much, Diler. Thank you for that distinctly over-the-top introduction. I'm very grateful. Let's start with a simple question. So there's all this enthusiasm about cities and agglomeration benefits. The pandemic comes along. A lot of people transition to work from a distance. And then we see big measured productivity gains.

What has gone on there? So it reminds us that for many jobs, in a static sense, right, you can do this long distance. You can make things work. And I think many of us found this, right? I mean, we wrote this book in eight months over the pandemic year, distinctly away from each other, partially because there were no distractions and all that was good. However, I think we also need to recognize the limits of long-distance living. The most important of those limits is just it's much less fun. It's much less joyful. But while it seems as if it's fine for static productivity,

it seems distinctly more problematic for people learning and for onboarding new talent. And let me just give you two types of studies. So one of which is the, they have the call center studies, which the father of that was the Nick Bloom paper, which was a randomized control trial in China, A more modern version is done by our students in Italia Emanuel and Emma Harrington, which looks in American call center. Both of them find the same thing in terms of static productivity. If anything, it goes up, right? But the workers who go remote are much less likely to be promoted in both studies.

And one interpretation of this is that promotion in the call center work means that you actually are given the job of handling more difficult calls. Now, how would your boss know that you were good at handling difficult calls if they weren't in the same room with you? How would you learn how to do those difficult calls if you weren't around other people? And so while the static productivity remains, you lose the dynamic benefits of being around other people. Second piece of evidence, right, it comes from burning glass technologies and new hires. So even though Microsoft tells us that its programmers were just as productive, right, overall new hires for programmers were down 42% between November 2019 and November 2020.

Firms were clearly unwilling to take the same kind of risks of hiring new workers that they couldn't inculcate in their corporate culture or screen them properly or do any of those other things. And so even though measured productivity did well during the pandemic, right, there were still lots of disruptions and in particular, many younger workers who came of age really lost out as a result of this. So if work from a distance goes fine in the short run, what's the cross-sectional prediction about where it will persist in the future? Is it firms facing bankruptcy, firms with immediate projects now, possibly startups who

will then later transition to all being together and one big happy family? family, but they're afraid they're going to fail before then. What should we expect? So I think we should expect young workers, more likely to be brought together, young firms as well, right, because you're very much at this learning creative phase. I think the optimal work from home strategy is a couple of partners who are in an accounting practice and have decided they know each other perfectly well and are delighted to zoom it in from wherever they are. So I think unquestionably, working from home will remain a part of the economy, right? And it may well be many workers end up spending 20% of their time working from home, even if they're part of a generally

full-time job. But for younger workers, for firms that are just getting started, I think being live is likely to continue as being a major part of the work environment. It also depends a lot on what your home environment is like. So if you're like us, if you're sort of a middle-aged professor who's likely to have a comfortable home office and maybe even, you know, not having kids at home anymore or certainly not kids who are crying all the time at home anymore, right? Working at home is a lot more pleasant than if you're a 23-year-old and live in a studio apartment in Somerville or New York or London. So which countries will benefit the most from this? So if, say, a Silicon Valley firm can now hire top talent from Mumbai or Delhi and everyone's used to the Zoom call, even if most of the

people in the home office are back to being together, what's that going to matter for geopolitically? So for sure, this is going to continue the rise of places like Bangalore. So the ability to connect over long distances helps really educated people within India. It doesn't necessarily help the bulk of 1.1 billion Indians, right? Do not sit with computers on their desk are not going to be natural software programmers. In terms of, in general, you think educated areas will benefit from this, more than less educated areas. I mean, there was a huge educational digital divide during the period of Zoom, right? In May 2020, 68.9% of Americans with advanced degrees were telecommuting. Five percent of high school dropouts were telecommuting. 15% of high school dropouts were telecommuting. 15% of,

of people who just at high school degrees were telecommuting, right? So the skill divide on this is enormous. And we shouldn't possibly think that in a world of sort of universal telecommuting, that's going to do anything for the bottom third of the American skill distribution. We should expect across cities, cities that are attractive and are natural places where, you know, educated people want to locate will do well. They may be in the U.S. or they may be elsewhere. So I don't think the model is that your Silicon Valley startup says, oh, just phone it in, right? But I do think, you know, you have eight people and you say, boy, we really love skiing. Why don't we go to Vail?

We really love beaches. Why don't we go to Hawaii or Bali, for that matter? So I would expect sort of a reallocation towards high quality of life areas and high quality of life countries. And this helps Britain and Ireland because of the English language? Absolutely. Or not? Cements English as a global language? Sure.

I mean, once we get past the chaos related to Brexit, sure, why not? I mean, Ireland is both a very attractive place to live and has lots of great English speakers and is very technologically savvy. Now, if I walk around Paris, London, New York, Dublin, almost any city you care to name. I see beautiful, older, urban neighborhoods, not everywhere, but really quite a few of them, if the city has not been bombed into oblivion. But I don't see newly created wonderful, beautiful urban neighborhoods, really anywhere. Why is that?

I'm not sure that I agree with you, but certainly the older cities of this country have regulated themselves into stasis, right? So we don't get beautiful new neighborhoods because historic preservation is a completely binding rule in London, in Paris, and in New York. So it's just very difficult to change the neighborhood in a way that works. And in terms of newer neighborhoods more generally, part of the issue is that we always build our cities around the transportation technology that is dominant in the era in which it's being created. And for most of the past 80 years, the dominant technology has been the car, which means there are lots of nice places for you to drive around in America. but there aren't that many new pedestrian neighborhoods for you to walk around. But there's been plenty of buildings, say, outside of the central core of Paris,

sometimes even in the Paris region, but all sorts of other parts of France. And it's never beautiful. French have an incredible culture, an amazing eye, highly sophisticated, may be willing to sacrifice cheapness for beauty. And yet they seem incapable of building new beautiful neighborhoods, whether they're walkable. We have old people's homes, which are completely walkable. They're never beautiful.

Nothing's beautiful. My father was an architectural historian, Tyler. So I have, he was a curator at the Museum of Modern Art. So I have a certain feeling that we as economists are not necessarily the best judges of the beautiful. So what's your view of like the center of Pompeu? You think beautiful or not beautiful? What's your view on Renzo Piano? I think there are many excellent individual buildings, right?

Bilbao Guggenheim. There's a long list. But neighborhoods is where we're falling short. Not individual buildings. Renzo Piano, amazing. Zumthor go all the way down the list. But neighborhoods, I don't see them. How about Barcelona, the parts of Barcelona that were built after the Olympics?

That's a perfectly walkable neighborhood and not a terribly unpleasant place. Great to live in. Not terribly unpleasant is a wonderful description of it. That's the best we can do. We're so much wealthier. It's crazy. I don't get it. It's an interesting question. And what about areas in Asia? Are there no blocks? And all of Seoul is new. There are no blocks in Soul that you find inspiring? I like them. I enjoy Seoul. But the really beautiful parts of soul seem to be the older remnant. which are not many at this point. So I will say one of my favorite architectural moments in Boston

is where H.H. Richardson's Trinity Church butts against the Hancock Tower. Agree, I love it. I actually think that that juxtaposition is stunning, and it's exactly when you get this dialogue between an architect to the past and architect to the present when really magical things happen. Which global city of any age is most underrated for its beauty? For its beauty.

Again, you want me to make beauty statements that are, you know, If we want to talk about the most efficient, we can sort of all agree on Singapore. You know, the last place now, I don't know how underrated is, but the last place I saw you live, right, is a particular favor of mine, which is Edinburgh. Yes. Maybe it's underrated or maybe it isn't, but it certainly is spectacular. I would say actually there are parts of Glasgow, which is definitely underrated, just sort of the physical bones of Glasgow are magnificent. I would say more generally, right, there are lots of American Rust Belt cities where the physical bones are fantastic, right? you know, parts of the south side of Chicago, not exactly a rest belt, but, you know, the

buildings along the lake, right, a little bit too monumental, not necessarily built on a human scale, but stunningly beautiful in terms of the way that they work with the water, right? Parts of Detroit, right, old buildings, old buildings meaning from before World War II, where it really works as space unbelievably well, even if the city is, you know, still facing the woes that Detroit has faced for 70 years. So your father was an architectural historian. What did you learn from him about the economics of building that is fed into your work? I learned nothing. Well, the only thing I remember about my father telling me was he had a model of

housing cycles, which was not particularly rational, but it was a model that said that you always started buildings during the boom, which means you always ended up completing them during the bust, which means you always ended up losing money on the buildings because you got the timing all wrong. Now, I didn't know at the time how to think about this. There is some truth to this. I mean, it's not totally wrong in terms of housing cycles. But my economics, I learned from my mother. You've got her MBA, at Columbia, and worked in capital markets for mobile for many years. I still remember this sort of When she explained to me, I still remember where it was on 3rd Avenue between 63rd and 64th Street, she explained Bertrand competition to me. And it was like the most magical thing in the world of this idea of these two shoemakers, as she told it, who are competing on price and somehow or they're getting down to the actual cost.

Can larger cities succeed over the longer term with dysfunctional public schools? It is amazing how underperforming cities are for providing upward mobility for poor kids, right? The facts that came out of Raj Chetty and Nathan Hendren and John Friedman's Opportunity Atlas, at the metropolitan area level, density and size are both negatively associated with performance. Within metropolitan areas, density and proximity to the city center are both negatively correlated with upward mobility. And there's a huge cliff right at the edge of the Central City School District, where if you get out of the Central City School District, you do much better economically and you're much less

likely to be incarcerated as an adult, right? This is, you know, it's the modern version of Lincoln-Stefons, the shame of our cities, the fact that we have had this problem for decades and have been unable to fix it. And yes, our cities managed to succeed despite that. But, you know, I would say in terms of our new book, the part that I feel least hopeful about is the school problem, which in some sense, one of the stories that we tell is that every city is going to be every place is more vulnerable to natural disaster if it's existing social institutions are weaker. But what's your political economy model of the persistence of that problem? Why doesn't the median

voter in the city just fix that? Right? We all want better schools. schools? You know, I think it's very hard to change things because there are very powerful entrenched interests in schools and because schools are somewhat complicated. And unlike policing, principals cannot immediately tell teachers how to change their behavior, whereas police chiefs can actually change what their officers do on a dime, right? It's very, very hard to get teachers to change. And so consequently, working change in the schools is incredibly hard. Now, we could move much more radically to vouchers, to have competition. And I think, you know, in many cases, that would be a great thing to do. But it's been very hard to move that politically, partially because of the strong

opposition of the teachers unions. You know, one of the things that we push in our book is something feels more like wraparound, after school, summertime vocational training, competitively sourced, right? Pay for performance because you know when someone's a plumber without they've learned how to do the skills or not. And so you can allow a full degree of competition and you can do it in a way that completely bypasses the unions. But I've been on the edges of the school reform movement for 20 years now, and it's hard to be very hopeful about it, in part because the political economy is just so difficult, because there are teachers who vote who are very anxious not to see change, even as they are often doing heroic work in the classroom themselves.

Our cities, as a result, just population sinks. So if you think if population shrinkage is a major problem in parts of the developed world, obviously Japan, Italy, Singapore, South Korea, maybe the United States. And fertility in cities is below replacement level. Aren't cities a big problem and our founding fathers were right? We should be suspicious of cities. They can't fix their own schools. Education is super important. And they're taking away people, which is also a fiscal problem. Many of our colleagues, right, Tyler. I think I am actually with you that I actually am in my heart a natalist. So just to be entirely clear. And it's part of believing in agglomeration economies. I just like having more people. So even if I weren't worried about Social Security and paying for itself, I

think each new human being on this planet is a new source of creativity that can work some kind of magic. Now, it is absolutely true that suburban living has often been a compliment to having kids, partially because the space is cheaper, and certainly that's always going to exist. But if you think about it, the part of the cities that are really detrimental to fertility, I think it's got to be the schooling. It's got to be that people living in cities don't think they have access to great public schools, unlike people living in suburbs, which leads us back yet again to think that the most important thing going forward for this issue, as for so many others, is to improve the quality of urban schooling. Why does it seem that urban crime has moved upward again, and at least possibly,

this seems to predate the pandemic? What's our best model of that? You know, most of the changes in crime are very hard to explain with very much, right? So I wrote a paper almost 30 years ago now called Crime and Social Interactions that goes back to observations that early 19th century French social scientists made that basically the existence of pure effects in crime means that you just get lots of variation that's not very easy to explain. I think we shouldn't also, though, forget that it's possible that some of this has to do with changes in policing practices. The evidence on policing practices leading to the reduction in crime is actually pretty thin. Most of the people who dabbled in this area believe that there's an elasticity of crime with respect to the quantity of cops that

seems pretty strong. And that comes from just, you know, various quasi-experiments like throwing more cops at a neighborhood seems to reduce crime. But the styles making a difference is much harder to tell. There's a great paper by my colleague Roland Friar and Tania Devi that shows that after there were a pattern of practice investigations of police forces that followed a viral incident of a police shooting, that crime rates spiked enormously, apparently because police stopped going to high crime areas when they came under investigation. So I think that's the kind of thing that would make me very worried about things like defund the police. So while I think it's absolutely true that we should demand that police treat every citizen with respect, and we should have metrics that keep that under account,

and we should have a system of incentives for police chiefs that require this, we certainly can't defund the police. In general, right, if we're going to ask the police to both prevent crime and to behave more respectfully to everyone, that's going to require more funding for the police, not less, because I don't believe there's a free lunch here, as I don't believe there's one anywhere else. Will NIMBY come to dominate the American Southeast? Is that the political equilibrium everywhere once you get enough development? This is the worry, Tyler. So the beauty of the Southeast has been in the land of free development where ordinary Americans can buy a home at a reasonable price because you haven't fettered the developers.

And yet in place after place, you know, in Austin, Texas, in central Atlanta, right, we're seeing the nimbie walls go up. We're seeing, you know, more and more barriers to tearing down and rebuilding. So I'm worried about this. And I hope the answer is no, but it certainly is something that would be very bad for America if we stopped having at least some parts of America that make it. easy enough to build so that ordinary people can buy housing at a decent price. But if cities can't fix their schools and can't fix their NIMBY problems and are super expensive and don't produce enough human beings, isn't there a funny kind of second best offense of let's keep people out of the cities?

The NIMBY's okay. Keeps them in the suburbs, better for them anyway. There'll be a higher birth rate. You need to have someone keep those cities going, but kind of write them off a bit, right? Maybe they're just not fixable. Look, remember, I'm an economist, right? which means that like you, I believe that the real desiderata's choice. What we want to make sure that people have options. And for some Americans, they're going to want to live in cities and some

are going to want to live in suburbs and some are going to want to live in low density rural areas. And that's just great. And we don't in any sense want to do away with any of that. I don't want to give any sense in which that's not at the heart of what I believe. At the same time, I think that cities are, you know, lots of areas are doing a crappy thing by making it too difficult to build. And I think there are social welfare benefits by freeing up developers. And I think in general, it's awful that cities aren't doing a better job with their schools and we should fight against those things. We're not doing it just so that more people will come to cities or that that would be the result. We're doing it primarily because the kids who are going into those schools are getting a raw

deal and we want them to get a better deal. And I think in general, one of the themes of the book is that America has done an amazing job over the last 40 years of protecting its insiders at the expense of its outsiders. And schooling, nimbism are all examples of cases in which our cities have become and our suburbs, machines for protecting entrenched interests of middle-aged, middle-class people and making it difficult for the people who come and start with less to find a brighter future. What's your underlying political model of why so many cities, especially coastal ones, have become so politically clustered along some particular dimensions? It didn't used to be this way, right?

The model that I have of this is about strategic extremism, which I published in the QJE in 2005, in the quarterly general of economics in 2005. And so a lot of it has to do with that model emphasizes communication. And in that model, you had people clustering all along religion as opposed to other cultural dimensions on the right because there were people who were speaking to Republican voters who had religiously oriented microphones. By contrast, the left tended to be more dominated by economic issues because the left had the unions and the unions were the primary communication device. So that's a model that emphasizes communication as the ultimate determinant of the way that partisan divides occur. So what do you predict is the final equilibrium? Is it self-reversing or does it

just keep on going and going, which could give you another reason to be skeptical of cities. I don't think this is just cities. Were you asking a question? I missed you for a second about partisan divides or about geographic divides and partisanship? Well, I think it's better for state cities if they have two political parties and the two parties compete, no matter what your particular views may be. So if cities don't give us this, right? Isn't that another problem with cities?

And if they keep people out, maybe that's not a terrible thing. So I believe very strongly that some form of competition, that's a major theme of this book. right, is that in fact, cities are more vulnerable than ever, even if face-to-face learning comes back, right, it's never been easier for people to leave the city. And so treating your businesses like they're a piggy bank is a terrible mistake. Now, often I would, I'm a traditional East Coast Republican, right, Tyler. I mean, I believe that there should be Republicans in cities, and in fact, I often have been one. I think this is a very good thing to have this. But I will settle for a robust, pragmatic wing of the Democratic Party, debating against a robust progressive wing of the Democratic

Party. And I think that's partially what the book is arguing for, is that, you know, city governments really need to be pragmatic because cities are vulnerable. And unless they actually make sure that they're actually providing decent schools and safe streets and doing so at a reasonable, cost-effective way, that people would just run away. And unlike you, I don't think that's a good thing because I think that when our geographic movements are determined by political dysfunction instead of economic reality, that's bad. Putting aside COVID policy, which of course is important, but what else can we do to make our cities healthier? in terms of the things that we talk about primarily in the book are around housing and policing and schools,

which we have already discussed. We do not do a lot on the book on transportation, but I certainly join the crowd of economists who have argued that congestion pricing is the best way to deal with urban traffic jams. There's no reason not to charge people for the social cost of their actions on this, and giving away city streets for space for free is just crazy. And especially since we now have technologies that can handle this. And if we introduce autonomous vehicles without congesting pricing, you have just lowered the cost of sitting in traffic, which means the first order behavioral response is that more people will sit in traffic. And our congestion will get even worse unless we introduce this from the beginning. So I think pricing is really good. I think it's also key that we

start thinking about, you know, we have new transportation technologies in a way that we haven't in a long time, right? So we have, you know, new autonomous vehicles. And it seems to be very odd that we're still thinking that the right technology for connecting cities is this 19th century technology of trains, instead of envisioning single dedicated lanes for autonomous buses that go 150 miles an hour, right? This is going to be more flexible, it's going to be cheaper, it's a 21st century technology as opposed to a 19th century technology. Now, I've seen the 1959 Brazilian movie Black Orpheus set in Rio de Janeiro, and the hills are empty and the city is beautiful.

Now, if you fast forward to Rio today, it's a war zone, right? and it's extremely densely populated. Is Brazil a good example of failed, DIMP policy? No, I think that those favelas are providing upward mobility for millions and millions of Brazilians. I mean, the overall track record of cities as a tool for turning poor farmers into middle-class urbanites is phenomenal. The one failure of Brazil's cities is that their police have failed, right?

And that's the one failure that I would say. And when you look at the failures of developing world cities, And there are plenty. I mean, there are demons that come with density, as you've pointed out. There's crime. There's contagious disease. There's traffic congestion. Right. But the right answer is not to look at those and say, oh, better you just stay on the farm. There's no future in rural poverty in these places. The right answer is to do battle against the demons that come with density. But think of your own earlier paper on urban giants from what, 1995? So a major city can be too densely populated for rent-seeking reasons. So Mexico City, arguably, is too large. You'd rather have more people in Monterey and Guadalajara. Rio arguably is too large. Shouldn't Brazil, many other countries, Austria, have a more even distribution of city sizes, more like Zipslaw, which sometimes they don't have? I don't think there's anything normative about Zipslaw, right? So I think in general we should

fight against the tendency to distribute extra rents to particular localities, right? That is certainly right. And it was almost assuredly a good thing that Rio stopped being the capital of Brazil about 60 years ago and that those rents went to Brasilia, which is now currently too large relative to its economic functioning because it's a political hub. You can leap from saying, oh, we want to restrict Washington's tendency to poor rents on Washington, D.C. You shouldn't then move from there to saying, oh, I'm going to have a national spatial policy. New York, you're slightly too big. Chicago, you could be 30 percent larger. How are we going to know this? We don't have any way as social scientists to actually know this exactly, and we should resist any

urge to try and micromanage the locations of firms and individuals. If we think of the United States, as you know in 1910, there's a high degree of immigrant segregation, right, people from the same country living next to each other, lower east side, wherever. That declines throughout most of the 20th century, and now it's come back. Why is that? Why the change? Well, immigration has come back, right? But even adjusting for numbers, it seems there's more clustering. How you adjust for numbers is it's never entirely clear.

I mean, remember, I mean, David and I struggled with this in our 100 years of American segregation. So it's very hard to know exactly how to adjust for numbers. And it's also a question of how linguistically distinct the immigrants are, how education distinct the immigrants are. Our view was that in general, segregation is more harmful, the less educated the group is. And so we should particularly worry about the segregation of those groups that have, you know, less skills and maybe take policies to fight against it. Although it's not clear, apart from policies that ban outright housing discrimination, which of course has been illegal for 50 years, it's not quite clear what strong policies we have for reducing levels of segregation

than cities. How dense should Los Angeles become? I don't have a view about how dense it should be. I have a view about how regulated it should be, Tyler, and I think it should be less regulated. And how dense would it then become? What would it look like? Would it all look like Culver City? This is exactly the same point as Marty Feldstein made starting in the 1970s, is that for many public policy problems, you don't need to know where you want things to end up, because it'll never end up close to where you want it to end up, right? All you need to know is the right direction. So I feel entirely confident, given how much demand there is for Los Angeles, given how productive Los Angeles is, that I wish to have more homes in Los Angeles.

But whether or not that means ubiquitous skyscrapers everywhere or more duplexes, I don't know, were only likely to get the increase in duplexes. I mean, for example, the California law that was put in, I guess, a week and a half ago, right? I don't know if Gavin Newsom has signed it yet. That allows much easier permitting for two-unit projects, right? That's hailed as like a huge triumph because it makes it easier to build projects with exactly two units. This is what we're actually talking about.

So I feel confident that I'm in favor of two-unit projects. And I think there are lots of core areas in downtown L.A. that would probably be well served by having more higher-permized condos than they currently have. As you know, there are quantitative attempts to estimate the cost of NIMBY policies, most notably by Marelli, among others. But those attempts don't typically take into account the fact that the U.S. is uniquely bad at building cheap infrastructure. So if we made New York, San Francisco, L.A., other cities much larger,

we would have to expand infrastructure. but that's one of the things we're worse at. To what extent would the potential gains from Yimby dwindle if we take costly infrastructure into account? I think it's awfully hard. I agree with you in terms of the cost of American infrastructure. It's a shocking thing, how expensive it is to build. In some cases, for example, you can expand,

if you expand density in core areas of Manhattan, many of those people can commute to work by walking. And the sidewalks are not overburdened. So those are areas in which you would not require huge amounts of extra infrastructure to build. And often, you know, if you think about the infrastructure requirements in the center and on the edge, it's not totally obvious that it's higher in the center than on the edge, right? In many cases you can take account of existing economies of scale. And in cases like Los Angeles, where the gap between valuation and construction cost are so large that,

you know, even if you say you're going to spend on infrastructure twice as much as physical costs, you've still got a lot of social value that you've created by opening up a little bit. How much right now are we exporting American poverty to American suburbs, and are our suburbs capable of handling that? That's just not at all the way that I think. But say, there's some people who just aren't that productive. They're priced out of cities. They move to suburban or ex-urban areas.

Social services are weaker. The bus network doesn't work so well. There's problems getting your car fixed at an affordable price, and in some ways their poverty problem has become worse. And should we build suburbs to be better geared to handle people who will have low incomes? I think it's ideally the answer is you don't really want political or public policy-based reasons to relocate. But I don't have a view beyond that in that where I want poor people or rich people to locate. I mean, I think it's in general, it's a matter for their individual choice. If you're

telling me that it's much more expensive to deal with poor people in suburban areas, it's something which I'm not totally confident that it is. But certainly, you know, I believe that access to public transit is one reason why poor people tend to live in cities. Then maybe you want to lean slightly against suburbanization of poverty. But this is an area which I would have very little confidence in terms of applying on any public policy whatsoever. It just doesn't feel to me like I have a strong view on where people should live. Every day I get a spammy phone call. Someone wants to buy my house. BlackRock, more seriously, is buying up a lot of housing. Is this a worry or is this just the market working? It's not something I worry about very much. I don't necessarily see a market failure in here in any way

or the other. What do you think BlackRock is going to do with your house? Are they going to rent it out or they're going to tear it down and build something even fancier than the cow in homestead? If they're allowed to, they would build a much nicer structure. I won't do that because I have to worry about where do I put my things in the meantime, and I'm focused on the short run, right? Right. So I'm not worried about it. My worries that no one wants to buy my house, right?

That seems right. No, I certainly don't worry about someone wanting to buy your house, whether it's a company or an individual. No. I mean, I just didn't know if there was some externality you had in the back of your mind on this that I wasn't aware of, given that I'm not hearing any. Parking minimums. How much do they matter?

I know, maybe BlackRock wanted to put lots of sewage treatment plants in your area that we're going to spew particular things on your neighbors and maybe we might want to have a policy controlling that. Some people say it'll be a new housing bubble. Some of it's like the Airbnb complaints that you have buyers who then rent and there's a positive externality from homeowners. That's possible, right? So I don't dismiss those arguments. I'm not personally worried, but you're the urban economist, right? I'm asking you, can I proceed in my life state of unwary? The area where you hear this most is when you get the absentee buyers in places like Vancouver.

That's when you hear that. So you build these fancy towers and, you know, it's often used as an argument against new construction. We built, you know, this sparkling new tower in Vancouver or New York and it's just being owned by Russian oligarchs who aren't even there. Now, I usually say in response to this, you know, if you tell me you're selling a, you know, $50 million apartment to someone and they're never there and you're unhappy about that, I tell you you're not charging enough in property taxes. because by and large, you've just actually made a huge amount of money on property taxes and you're not delivering any city services whatsoever. So from the time like how in fear of like extra infrastructure, this is ideal because these guys don't require anything because they're never there.

There's an old joke, by the way, in the real estate circle, that one of Donald Trump's clever ideas when he was a real estate developer, and I have no idea if there's any truth on this, was that he figured out you needed fewer elevators when your owners, when your residents were mostly absentee. So you could actually reduce the cost on elevators. Again, I have no idea if it's true, but if so, it's clever. The one area in which I do worry slightly about the tall buildings that aren't occupied is for someone who likes to make the case over and over again, the way to promote affordability is to allow more construction, right? An apartment building that has 10 apartments for oligarchs does nothing on that front.

So I still want it because I want to tax them and I want to use them to fund city services, but they're not actually a solution for any kind of affordability. Let's say we abolished all parking minimums. How big would the gains be and are there potential problems from parking overflow? Not if you're charging for the use of city streets there isn't. The problem is here we have some starting point, which we think people should have the right to park any way they want for no cost or for some severely subsidized amount. In a world in which city space is scarce, you want to charge as much, if not more so, for parking in a slot on the city street as the person who has a structured parking lot charges for their space. So I think once you charge people

for their space, there's no reason to impose extra regulations on free parking. The overall quantity of social benefit, you've got to ask the great Don Schoop for that. He's the one who's written the book on the high cost of freak parking. Let's say it's a suburban development. It's Tyson's corner. Someone wants to open some kind of big box store, and you tell them you have to have X number of parking spaces because otherwise people will park in front of homes.

And maybe there's some abstract equilibrium where all parking is charged for, but practically speaking, that's not going to happen, right? You know, I am not very worried. And in fact, I don't think big box stores really need much of an incentive on this, as they seem to be pretty good at recognizing that their customers demand parking close by. and they seem to be pretty good at posing it on their own. Yes, if you are repeatedly relying upon an action which inconveniences the neighbors, you might want to lean slightly against that, right? But it doesn't feel to me like a huge first order issue. And certainly in city streets, yeah, we really can charge everywhere. There's really no reason why this should be a single block in Manhattan in which it's free to park, right? There's no reason why you need that.

Now, some of your best known and most cited pieces, they're from the 1990s, and they're on institutions. and legal origins. Since that time, how have you changed or developed your mind on those issues compared to what you thought back then? I don't know. I mean, that stuff is, yeah, that stuff is 1999, 2001. I don't know that they've changed a huge amount. I mean, I thought more just about cities per se. I think one of the mantras that I keep with me is that city government capacity is more important than policy. So as academics, we're very big on what's the right policy. But in fact, if you've got a mayor who has at most two people who will do anything that the mayor tells them to do. It doesn't make any difference what policy you tell him or her because she's not

going to be able to get it done. So understanding the institutional restraints that particular leaders have is a big deal. I mean, I've spent a lot of the past five years, at least pre-COVID, worrying about cities in the developing world. Their institutions are quite important, and I certainly have the view that cities are one of the places in which we actually get better institutions. I mean, one of the stories I tell in the new book is urban fights of the 19th century to deal with contagious disease. This was a moment in which sort of urban, upper middle class, civic leaders came together to fight for sewers, to fight for aqueducts, right? And in some sense, this is the moment which government ceases from being just an agent of death. I mean, it's a bit of an exaggeration

to say governments pre-1800 were essentially only agents of death, but it's only a small exaggeration to say that. Over the course of the 19th century, governments actually start doing some good. And most of it's involved in delivering sewers and fighting against contagious disease in cities. And developing the institutions that went along with that infrastructure was a big deal. If we look at, say, Latin America, maybe Cordichiba, Monterey would be some of the more successful cities. What is city's success correlated with institutionally in Latin America? I have rarely seen things that are good quantitative studies. I mean, I can tell you things that I've certainly seen in Monterey, the Medellin story is amazing. And if you think about Medellin

going from the city of Pavlovescobar to today, a lot of it often has to do with relative pragmatic business leaders who wanted a safe and competent public sector that could enable their business growth. So I think that's a lot of the Monterey story. Monterey also has a very empowered university, right, that is highly competitive as well, that I think has been partially a force for good. There's a story that I've heard that I've never been able to independently confirm, but the role of the business community coming together to fight crime in Monterey, to fight the gangs, which, if true, is sort of an amazing tale. And the business community also played a role in terms of crime fighting in Colombia as well.

Can you hold out any hope for charter cities like Prospera and Honduras? Can that work? Or is it futile? I think it's very hard for governments to keep their hands off the golden egg. So, you know, the beauty of Hong Kong was it had the British Navy protecting it for most of its history. And so there was no way that China was going to or anyone else was going to grab it. But it's very, very hard. And I think the story in Honduras shows that, that it's very, very hard for a country to say, oh, we're going to have this different jurisdiction run the city. And it's going to be much more successful than the rest of the country. and we're going to think that that's okay.

It's just very hard to see how the populist political dynamics don't cause that to unravel. But it's worked for UAE, right? So Dubai is massively successful. The UAE allows it to continue. Yeah, but the rest of UAE is incredibly rich, too. I don't think generalizing from UAE is very easy, Tyler. It's not wealthy only because of oil, right?

It's a banking center, service center. So someone let that happen. UAE could have gone much worse under our normal rent-seeking institutionalist story, and it didn't. So if there's hope for UAE, is there hope for charter cities, or is there some difference that makes one more plausible than the other? There is always hope, but everything is easier if you have trillions and trillions of dollars

of oil wealth. But it's also harder, right? There's a resource curse. If you're not in Norway, the resource curse seems like a negative. My view is the resource curse tends to be in the intermediate levels. That once you have just an unbelievable amount of wealth, it tends to be much less of an actual resource curse. Will there be a new major American city started in this century?

assuredly, but I have no idea where. Let's say you're investing. Where would you put your money? I think there's a lot to like in the highly educated pro-business cities of the South. I mean, traditionally this was Austin. Again, I worry about Nimbus in Austin. But I think the places that combine education, right? I mean, Atlanta is about as well educated as Boston is. But on the other hand, they just have a very different atmosphere towards free enterprise than Boston does. So those are the things that I think of as being really powerful.

And they have, because they've embraced a certain amount of economic freedom, they make it a lot easier for ordinary people to buy housing. I mean, I basically have a two-factor model of economic growth, Tyler. I mean, my model is always it's about education, and it's about institutions that are relatively pro-free market, relatively pro-business. So can Miami become a tech hub?

They have a bunch of schools, you might say none are quite top-notch, sympathetic mayor, right? Sure, it's certainly possible. You know, there appear to be certain weather issues with Miami, which I'm not going to have any strong views on. There's earthquakes in San Francisco. They're surrounded by raging fires, right? They're in a desert.

The Colorado River is problematic. So why not be more bellish on Miami? It's not my business to predict the climate, but yes. And there's a lot to like about being, you know, this hub that's connected to all of Latin America, right? Of course. But you don't sound on board. I don't think at all it's impossible. I'm just resisting the urge to be confident about this.

Putting aside Boston and Cambridge, which are doing great, what can the rest of New England do to stay vibrant? Same mantra as every place else. Attract and train smart people and get out of their way. But won't they just leave for Boston and Cambridge? No, anyway, the pandemic has been good for low density in New England in terms of quality of life. You know, you need a little bit less regulation in lots of spaces. You need to make it easier to make fun in these areas to be an entrepreneur of entertainment, which means starting restaurants, bars, food trucks, etc.

It's hard the further you get north. I mean, the climate is holding a detriment in parts of Maine or parts of Northern New Hampshire. But I think most of New England is doing pretty well. Now, we're almost out of time, but two closing questions. And this one I asked David also, if you take your book with him, survival of the city, living and thriving in an age of isolation, I'm not necessarily looking for a disagreement, though that would be okay, but an area where you and he still see things differently in the book, from the book.

What would that be? He has still not convinced me on single payer health care. We do not say anything about that deliberately. That's an area in which we certainly have not yet come eye to eye. And I should say, like, he's a great expert on this and I'm not, so I'm not trying to convince anyone that he's wrong. I'm just saying that he is not yet, in 30 years of our friendship, he has not yet persuaded me on this. And I don't know if we actually differ on the weight that we would put on security versus respect of the policing.

I'm not totally sure about that. I'm not sure that he's on board for every bit of my gung-ho. Let's permit every new business that we can. Oh, I would say, okay, let me take this. In our work on obesity and our work on opioids, I am still less comfortable with the view that, you know, you're going to have paternalistic policy. that really push people to be thinner than they currently are. I am never going to be as comfortable with that. Despite the fact that I agree strongly that American obesity is one of the health problems

that make COVID so difficult here. Last question. What will you be doing next? I am going to be serving as the chair of my department and enjoying all the fun of administrative meetings on end for the next three years. Ed Glazer, thank you very much. And again, Ed's book with David Cutler, Survival of the City, Living and Thriving in an Age of Isolation. Thank you so much for doing this, Tyler.

Very much appreciate it. Thanks for listening to Conversations with Tyler. You can subscribe to the podcast in iTunes, Stitcher, or your favorite podcast app. And if you like this podcast, please consider rating it on iTunes and leaving a review. This helps other people find the show.